Last week both YouTube and Facebook rolled out updates to their respective messenger apps in hopes of better competing with iMessenger, Snapchat, WhatsApp, Viber, and others. We use or have tested all these, and we believe Facebook Messenger holds the most promise for a standardized and efficient platform for banks to leverage in order to increase communication with both their retail AND their commercial customers. In this post, we detail our reasoning for why banks should start to familiarize themselves with the application now and layout some use cases that banks may want to think about on their trek towards greater innovation.
Why Not Good Ol’ SMS Text?
Text, or Short Message Service (SMS), isn’t going anywhere, was the first mobile banking application and will probably be the last. Messaging is the most common thing you do on the phone, and that pathway is already ingrained. However, SMS has its limitations. For starters, both the customer and the bank need to have a cellular connection. If your customer services reps are in a branch with cell service, but your customer is stuck on a plane or in the middle of a building with only wifi, that is a problem that will prevent communication.
The other major issue with SMS is the lack of a usability layer or a set of rich features to help customers better communicate. In order to text your bank about a problem, you have to have their number already in your phone. While a customer may have already included your bank’s text service number in their contacts, they likely don’t have the text numbers for various departments. Further, if a group of bank staff wants to work on a problem with a customer, text gets messy quick.
Finally, unless you are an Apple user, it is hard to move from your phone to your computer and carry on the same conversation. In this age of omnichannel banking, this is almost a requirement, and SMS is highly deficient in this area. Messaging apps solve this problem by bringing all conversations onto one server.
Instant messaging, on the other hand, solves all the above problems. For bankers trying to communicate with customers, you can get better information like an acknowledgment that they read the text. Different departments or groups organized around geography, products, solutions or the client segment can easily be formed and looked up in a directory. For example, a customer service representative can have a conversation with the customer and then bring in the mortgage or cash management group to continue the conversation. Alternatively, the customer can easily find the cash management group and go directly. This advantage to go from a one-to-one conversation to a one-to-many conversation easily is a huge advantage that a messaging app has over SMS.
Customers can also share their physical location which comes in handy if they are trying to find the nearest branch or get directions to your location. All parties can have a seamless conversation moving between a mobile and desktop platform with ease. On top of all of this, banks can record and manage compliance as all conversations are stored together on a single server instead of being dispersed over many phones and cell networks.
Why Facebook Messenger Is Worth Consideration
For standardization, compliance, and training, banks will have to just have one messaging platform or at least have a limited selection. In addition to SMS, Facebook Messenger is now the most likely candidate as it already has 1 billion monthly active users, most of those in the U.S. From a demographic standpoint, Facebook already has a wider range of demographics from the 18 to the 70-year-old. Unlike Snapchat and Viber that mostly skew younger, it is likely that Facebook already has your most profitable customers. On top of that, it has one of the best feature sets of any platform out there and is one of the only platforms that can be used for businesses.
For example, we highlight just some of Facebook Messenger’s new features that vaulted the platform to the top of our list:
Directory Functionality: Trying to find a business or a specific individual that you don’t know has always been a problem for messaging app users. You either have to know their short name such as “CSBank” and most likely have to get their permission before you can communicate with them. For businesses like a bank, this is a problem. Customers should easily be able to look up “CenterState,” “CenterState Bank,” “CSB” or “CenterState – Mortgage Department” and find all with ease. In addition, users can use the geolocation functionality so can easily find and connect with their nearest CenterState Branch without having to know or look up their address and telephone number. To date, Google has been the best at this, but as long as your bank and bank departments have a page on Facebook, customers can easily connect.
Camera Integration: As we have written about previously (HERE), Snapchat is the best social media platform when it comes to visualization. Unfortunately, as we pointed out, banks are not that visual. However, when it comes to customer service, we have found that visuals play a part approximately 15% of the time. That is not enough to warrant a Snapchat customer service application but is likely more than text can efficiently handle. Pictures of checks, physical problems with ATMs, a picture of a building our customer wants to finance are just some of the photos that banks get in the course of an average day. Having the ability to attach a photo and then highlight or annotate on it is an advantage that only a few platforms can pull off. Facebook Messenger has recently added several features, including the ability to handle native live video that will be a boon to banks.
Chatbots: In our opinion, Facebook and Google will increase their following on their respective messaging apps because of their expansion of chatbots. As we have written about (HERE), artificial intelligence combined with messaging will change the face of banking. Facebook Messenger is yet another example of why this is true. Rolled out earlier last year, Facebook Messenger already has a fairly robust chatbot that actively helps customers with shopping and basic tasks. Last year, Facebook released their set of developer tools so now any bank can customize this functionality within Facebook to handle customer service or to serve as a banking concierge.
A customer can message that they have a problem and the chatbot will immediately respond with a series of one to four questions that will help define the issue and connect the customer to the right department.
One application we have been playing with (below) is the ability for a customer to receive a market value on any property. Send an address on the bot for a home or warehouse, and the user will get back an estimated value. 30 seconds later, the customer gets sent a button that says “Get Loan Terms.” Clicking the button in the app gets an estimated financing value, maturity, fixed rate and amortization returned along with a question of do they want to talk to someone on the phone – all automatically. It is a way to leverage your commercial lenders so they can be in many places at once.
Facebook will continue to build on this effort giving banks greater options in automation and providing a more human-like conversational experience for customers by mid-2017.
Analytics: Recent and planned improvements in Facebook Messenger’s analytical tools is winning us over as it is one of the few apps that allow banks to see what is happening on the platform. Data on demographics such as education or company combined with data on usage/engagement, such as the number of times a business has used the app to contract the bank, gives managers powerful tools. Information is all exportable thus to aiding in compliance.
Other Features: Soon customers will be able to search for banks that have chatbots set up. Plug-ins allow banks to include a “Contact Us” button on their website or mobile application that will open Facebook Messenger giving banks a turnkey application. “Messenger Codes” is a visual matrix similar to a QR code that can be placed on sales brochures or ads that when scanned by the user will link either directly to a bank’s landing page or can open a conversation thread. Banks are already experimenting with this on statements, business cards, and marketing materials.
Banks will also be able to take advantage of a new tool that lets users authenticate into a bank’s application with just a phone number or a "log in with Facebook" button. This would be for non-secure banking apps, but the advantage is that in one test a company increased sign-ups by 33% compared to having the potential customer enter in their basic information and get a login or password via email.
While a set of real-time compliance and monitoring tools are the weak link on all these messaging apps, things are improving, and we look for new tools to arrive on this front in late 2017.
Putting This Into Action
The potential for messaging apps and Facebook Messenger, in particular, holds deep promise. For banks $500mm in asset size to $20B that don’t have a deep app development staff, Facebook Messenger allows an inexpensive way to gain a secure communication channel quickly. A channel with capabilities that are better than what most national banks are planning.
What would have cost hundreds of thousands to build yourself, now can be duplicated for less than $60,000. If that number seems high, keep in mind that the amount is what banks already spend to keep the lights on for ONE month at a small branch. While a small branch may touch 1,500 customers, Facebook Messenger can leverage multiple times that number and allow banks to access Facebook customers, which remain some of the fastest growing and most profitable customers on any social media platform.
Instead of putting a wealth management or mortgage specialist in a branch with limited hours, banks can now inexpensively centralize the function and allow real-time communication, including live video, between a customer and product expert. What you get potentially is less friction, more usage, greater engagement and a better customer experience. Banks can increase the quality of their staff, expand hours and allow the customer access to information around the clock.
It is not a question of if, just a question of when banks will leverage messaging apps over text and if Facebook Messenger is the right platform to include in your arsenal. We see the potential, and while it may not be a 2017 strategic item, it should be on every banker's radar screen for the very near future.
Submitted by Chris Nichols on January 23, 2017